at the breakfast meeting of the Certificate Programme in Management Development
for Municipal Finance at Wits Business School
20 September 2007
Programme Director Timothy Malule
Wits Business CPMD Director Professor Mthuli Ncube
Executive Mayors
Speakers and Municipal Managers
Officials
Ladies and gentlemen
The central issues concerning building capacity is to manage municipal
finance concern financial structure, capacitating internal audit, financial
routines, training in terms of the NQF and skills transfer. The importance of
focusing on practical solutions to capacity challenges is critical.
It is important to develop a common understanding regarding the budget and
finance office and the treasury. In this, it must be understood that in an
institution there are specific functions within its finance structure with
specialist in areas such as budget office, recording of finance data, supply
management personnel etc. There is uneven dedicated capacity for each of these
functional areas. The distinction is critical in ensuring that solutions
proposed are responding to the challenge of financial structures in
municipalities may be in place, they are not functioning in line with
legislation. There must be caution that the issue is not addressed to only in
terms of compliance.
A distinction must also be made regarding capacity and capability. Whereas
capacity refers to the personnel in terms of filling a vacancies and
institutional systems and processes, capability refers to skills and
competencies. As such, there is a need to focus on the challenge of
municipalities in having appropriate finance structures to ensure effective
service delivery. The structural issues relate to the need to establish
functional budget offices, appointments of capable Chief Financial Officers
(CFO) and Supply Chain Management. Currently, although municipalities have
budget and treasury office structures in place, they are not consistently in
line with legislative requirements. In addition, capacity constraints in terms
of personnel and operational systems limit effectiveness and thus, result in
municipalities' inadequate delivery of their financial mandates.
Responses to the need to improve finance capacity must take into
consideration on capacity, capability, information technology (IT) systems and
instituting change management processes. Critical success factors must be in
place to ensure that the interventions implemented are relevant and effective.
These are political support, political will and top management support in
transforming the finance function.
In part, the fulfilment of this financial mandate requires a paradigm shift
in the mindset toward prudent financial management within municipalities that
reflects a clear link between the finance function and service delivery. This
requires change management processes that encourage the internalisation of
'Batho Pele' principles, specifically in the finance sections of
municipalities. It also requires the implementation and appropriate application
of Acts such as the Employment Equity Act and Skills Development Act
appropriately.
In responding to the challenges related to the overall finance capacity of
municipalities, co-operative governance mechanisms must be actively used to
review financial establishments of municipalities. This requires optimising
current opportunities through various projects currently being implemented at
national and provincial level. For instance, support grants such as, Financial
Management Grant and Municipal System Infrastructure Grant, from National
Treasury should be utilised correctly in terms of establishing 'shared
services.'
Exploring the use of these shared services, should play a role in enhancing
municipal capacity and creating economies of scale. There are already some
instances of this in some municipalities, where the model of 'shared services'
has been tested at district level. The quality of other National Treasury
initiatives, such as internships, should be improved through appropriate use,
regular monitoring and evaluation.
The issues raised by the Auditor-General year after year have nothing to do
with accounting issues but have got to do with leadership. I had a meeting with
the Auditor-General Terrence Nombembe recently and he said the issues that are
being raised have nothing to do with accounting, but leadership and document
management.
In addition, the human resource processes must be streamlined to enable
appropriate skills to be attracted and retained. This includes ensuring that
the human resource personnel have the necessary competencies and skills to
facilitate appropriate recruitment and retention processes. Linked to this,
there must be a proper performance management appraisal system that is informed
by the Integrated Development Plans (IDPs) and Service Delivery, Budget and
Implementation Plan (SDBIP), in order to ensure that personnel continue to
receive incentives for high performance. South African Local Government
Association (Salga) can contribute by investigating the threshold for vacant
positions in municipalities.
Efforts must be put in placed to increase awareness of a career pathing
within municipal finance at tertiary institutions as this will encourage
quality skills to enter the local government terrain. I believe that the
Certificate Programme in Management Development for Municipal Finance programme
is one such initiative and an important milestone reached to develop municipal
capability in the treasury and finance departments.
In responding to the need to improve capabilities at municipal level,
generic municipal training programmes must focus on all staff and not just top
management. This will also enable the implementation of competency regulations.
Linked to this, a standardised procedure for conducting skills audits must be
established and implemented. This will create a solid based for the
introduction of multi-year training, mentoring and coaching initiatives which
should also be implemented and continuously monitored by province.
Let me re-iterate the point on mentoring and coaching, managers who have
attended this program need to take the lessons, tools and techniques back into
the work place. I believe that you have the responsibility to initiate and find
innovative ways to usher in a new culture of learning in municipalities. We
need to transform the workplace into a learning organisation, improve on our
dialog and conversations about better practice and knowledge exchange, bring
about a community of practice and learning, in short you have the
responsibility to ensure that your capability, knowledge and skills multiply in
your municipality as many times as possible. The challenge is to have all the
relevant financial officials qualified and capable by 2012. You are the firsts
of the lot and I look forward to a complete turn-around in the skills
deficit.
In facilitating training programmes, innovations such as electronic
'on-the-job' training should be made available across the province. This will
also create the possibility for pooling resources with capacity building
initiatives by other key stakeholders such as, Development Bank of South Africa
and National Treasury. From practical standpoint, procedures manuals should be
developed and included as part of the training programmes.
In addition, the introduction of online forums within the community of local
government finance officials will also assist in building the required
capacities and also provide space for exchange of lessons and knowledge. In
addition, such forums and on-line resources could include portals of portal of
relevant local government policies and municipal by-laws etc.
In order to further strengthen municipal finance capability, every effort
must be made to ensure that every consultancy contract includes a skills
transfer clause, which is monitored and evaluated.
A key issue identified in capacity improvement effort for the efficient
function of the municipal finance function relates to the general need for
improved information technology systems. In this regard, every endeavour should
be made to implement uniform systems with respect to finance, human resource,
inventory management etc, through local government. We must ensure that there
acceptability and feasibility. The use of common systems will also further
enable an environment for interchanging skills and capacities across
municipalities in the country.
The internal audit function of municipalities requires specific
consideration. Central to its improvement will be the establishment of changes
in the current reporting levels in order to comply with Internal Audit
standards and Municipal Finance Management Act. With this, there must be
training of management so as to enable it to fully understand the role and
value of the Internal Audit function. In addition, detailed guidelines on the
criteria for the appointment of Audit Committee members will need to be
provided by provincial Treasury.
Finally, at the level of districts, given the known capacity and personnel
constraints, it will be necessary to establish a 'shared services' framework
for the Internal Audit function. The overall finance function within
municipalities will need to be systematically and consistently monitored by
municipal management, in order to ensure that there is sufficient discipline in
the operation or execution of the routine functions.
Knowledge is power, I wish to see many more Councillors and officials taking
interest in self development to improve their skills and knowledge base. There
should be a time in our lifetime that municipalities are functioning like
business entities whose main interest it to please their shareholders. I have a
firm belief that in Gauteng this is possible because we call our call ourselves
a smart province. You are here to learn and make use of this opportunity to
exactly just that. Enjoy the rest of the day!
I thank you
Issued by: Local Government, Gauteng Provincial Government
20 September 2007
